Posted on 20230326 4:47 PM / Updated on 20230326 8:17 PM
(Source: IE University/Disclosure)
Corresponds in Lisbon China’s strong presence in Latin America will require increased efforts by the United States and Europe to keep the region closed to Western visions. According to IE University rector Manuel Muñiz, who was Spain’s deputy foreign minister, the fact that most Latin American countries refuse to support sanctions against Russia after invading Ukraine suggests that North Americans and Europeans are failing to strengthen relations with Russia these nations.
He believes that Brazil, as Latin America’s largest economy, will play a fundamental role in regional integration. However, Latin America needs to rediscover economic growth in order to redistribute income. According to Muñiz, the huge social inequalities are constant sources of tension in the region, which in the five years before the new coronavirus pandemic had its worst performance in activity in seven decades. And as she began to recover, the severe health crisis hit her. “This great social inequality feeds political polarization and promotes populism,” emphasizes the Professor of Politics, Economics and International Relations.
For the Dean, given the recent turn to the left in parts of Latin America, particularly Brazil and Chile, this political current cannot fail to promise to improve the lives of the population, at the risk of causing further turmoil. He also draws attention to the prevailing rule of law and political and legal certainty to make investors feel comfortable allocating resources that countries so desperately need, especially to improve infrastructure. The following are excerpts from the interview Muñiz gave to the Courier regarding the IberoAmerican Summit that took place this weekend in the Dominican Republic.
How did countries get to the Iberoamerican Summit after two years of pandemic?
With big changes since they last met. On the economic front, the past few years have generally been difficult for the slowgrowth region. Politically, there have been earthquakes that indicate the leftward deviation of several countries. This applies in particular to Chile and Brazil. And finally, at the geopolitical level, the meeting takes place in a clear deterioration in relations between the United States, Europe and China. Rising global tensions will pose a challenge for Latin American countries, given China’s central position in the regional economy.
What are the biggest challenges facing the region today?
As has been the case for many decades, the greatest challenge is to ensure equitable growth. The five years leading up to Covid were the worst in seven decades for the region’s economic performance. And the impact of the pandemic has been very significant. Latin America has seen a decline in economic activity on a scale not seen in 100 years. In other words, Covid hit an economy that was still recovering, faced the collapse of a commodity cycle and struggled to improve productivity and increase income.
We have seen both farright and farleft governments take power in several countries. How do you rate this movement? What are its consequences?
I believe that the movement to the left is rooted in the need to build more just societies. The region has had a mixed record on this front, to say the least. And that has clearly fueled political polarization. The big question is whether these new left leaderships will be able to deliver.
Latin America has always been a paradise for populists. Why can’t you get rid of this pest?
In my opinion, the fundamental causes of Latin American populism are social inequality and the lack of a stable and secure middle class. The lack of an efficient income distribution tool weakens the center of the political spectrum.
From an economic point of view, Latin America has proved a failure. It is growing less than the average for the other regions. Why?
There are many reasons for this lack of growth. Human capital development is certainly one of them. The lack of infrastructure in much of the region and modest regional economic integration are other contributing factors to this reality. What’s more, political instability, which in some cases leads to legal uncertainty, is sometimes particularly critical and discourages foreign investment.
Is it possible to change this discouraging situation? As?
Yes, through clear and sustainable policies to combat social inequalities, invest in education and infrastructure, promote regional integration and support democratic institutions and the rule of law. These are points that make a big difference.
How do investors see the region? Is there a reason for this distrust? Why?
Rule of law issues are omnipresent in Latin America. In the case of investments originating in Spain, there have been cases of political instrumentalisation. This is a symbol of Mexico. Hardly a week goes by without the country’s top leadership attacking Spanish companies or their operations in the country. This discourages international investment.
What are investors in the region most afraid of? The erosion of the democratic rule of law and exposure to political risks. Can one imagine a more prosperous Latin America? Why?
Absolutely, it’s possible. But it needs a certain kind of sustained political leadership. The region has exceptional natural and human resources. In my opinion there is no structural reason why Latin America cannot achieve similar per capita incomes as we are seeing in Europe or East Asian economies.
Why is the United States turning its back on Latin America?
This is a very relevant question. The US has not invested enough time or resources in Latin America. She has now noted that despite pressure from the United States and Europe, the region is unwilling to impose sanctions on Russia, for example. China, Russia’s ally, is most Latin American countries’ most important trading partner and one of the region’s largest creditors. And, by the way, even one of the largest investors, including in Brazil. Both the US and Europe must have a stronger diplomatic and economic presence in the region. If we want Latin America to remain part of the West, we must commit to it.
What role does Brazil play in regional integration?
It plays a key role. Regional integration simply won’t take place in earnest if Brazil isn’t there.
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